$20M bump in Grand Rapids hotel rents in 2015

Hotel/motel revenue was up about $20 million in Kent County in 2015 as occupancy neared 70 percent and boosted proceeds from a lodging tax up $1 million more than budgeted, according to the convention and visitors bureau,

About 1.8 million room nights were rented across the county last year, pushing annual revenue to about $180 million, according to preliminary numbers compiled by Experience Grand Rapids.

"This is, I think, our sixth consecutive record year," said Doug Small, president and CEO of the city/county convention and visitors bureau.

Small said 2015 room revenue is expected to be up 12 to 13 percent from the $160.6 million generated in 2014. Room occupancy increased from less than 65 percent to upwards of 68 percent, he said.

The growth was higher than expected, generating nearly $9 million in revenue from a 5 percent county lodging tax. Kent County budgeted $7.6 million in hotel tax revenue last year.

The tax revenue pays debt on DeVos Place, the downtown Grand Rapids convention center, and funds part of the Experience Grand Rapids budget. The tax also pays $10,000 to the annual Festival of the Arts in Grand Rapids.

The county's lodging tax fund last year paid $6 million in debt on the convention center, and will give 16.75 percent of the tax revenue - about $1.5 million - to Experience GR. The county each year also kicks in money from its general operating fund, including $800,000 this year.

"We're trying to build up enough of a fund balance in the hotel-motel tax to smooth out the (debt) payments in the future so we don't have to augment it with general fund (money down the road)," said Daryl Delabbio, county administrator.

"The potential exists, if we continue to see the types of revenues and increases that we've seen over the past couple years, that (the $800,000 general fund) subsidy could be reduced or eliminated. If we can get 4.5-percent growth annually we'll be good."

Because of the way the bond to build DeVos Place was structured, interest payments will increase in the coming years. Annual debt service is scheduled to rise from $6.3 million this year to $11.1 million in 2031, the final year of the bond.